Apple Might Eliminate Fingerprint Sensor On iPhone 8 To Avoid Delay

XAutoplay: On | OffApple's (AAPL) component suppliers are struggling with a new optical fingerprint sensor, which could lead to shortages or a delay in availability for Apple's upcoming iPhone 8 or elimination of fingerprint sensing from the next-generation smartphone.

That's the assessment of Pacific Crest Securities analysts in a report to clients on Sunday. The Pacific Crest report follows other reports that say Apple is having problems producing its next handset, raising the possibility that it could miss its usual mid-September release window.

"While this creates some risk of production delays, at this point we do not believe it materially threatens volume through the coming iPhone cycle," Pacific Crest said.

The investment bank reiterated its overweight rating on Apple with a price target of 150.

Apple shares rose 0.5% to 141.80 on the stock market today, moving back above a 141.12 follow-on buy point after undercutting that level on Friday.

"The anticipated move to a full-screen OLED panel in the coming iPhone 8/X eliminates the physical home button, which necessitates a move to a virtual home button and an optical fingerprint sensing solution to read fingerprints through the OLED panel," Pacific Crest said. "At this point, we do not believe Apple's optical fingerprint module provider has firm orders for production, which suggests Apple does not have functionality of the optical fingerprint sensor ready. Additionally, we believe Apple has evaluated Synaptic's (SYNA) optical fingerprint solution, but that it has not been qualified."

If Apple cuts the fingerprint sensor from the iPhone 8, it would rely on a biometric login that relies exclusively on 3D sensing, Pacific Crest said.

"Since fingerprint login is such a widely used feature and 3D sensing is unproven for this purpose, a wholesale elimination of fingerprint sensing in the OLED iPhone would create incremental risk to consumer adoption," Pacific Crest said.

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